Just 10 days ago we wrote about Herve Falciani, a French and Italian citizen wanted by Switzerland for allegedly stealing customer account information. Switzerland wants him to stand trial for theft. The Spanish government, however, says the information possessed by Falciani documents widespread money laundering and tax evasion by HSBC clients. Spain’s National Court ultimately denied Switzerland’s extradition request.
New information revealed by The Economic Times indicates that Falciani turned over records of 24,000 HSBC clients with unreported foreign accounts in HSBC’s Swiss banking unit. If that information isn’t bad enough for those who failed to repot those accounts, we now have learned that France’s finance minister turned over those names to the IRS.
Willfully failing to report a foreign account is a crime in the United States punishable by up to 5 years in prison. In certain cases, taxpayers can also be prosecuted for tax evasion, particularly if the interest generated by those accounts wasn’t taxed or the account was used to hide unreported income. Unreported offshore brokerage accounts, hedge funds, CD’s and other financial products can also give rise to a tax evasion prosecution.
We have long warned that the world gets smaller each day. The ability to hide money from the IRS is getting more difficult. And with huge civil penalties and the possibility of a tax evasion convictions, the risks just aren’t worth the reward.
Although the IRS has not resorted to purchasing stolen bank records, as the Falciani case reveals, Uncle Sam will still accept the information if offered by another country.
If you have an unreported foreign account, there are methods to come into compliance.
For many people, the easiest method is the IRS’ Offshore Voluntary Disclosure Program, sometimes called “OVDI.” This program is a true amnesty program that provides for a single year 27.5% penalty, no audit and a get out of jail free card. For taxpayers who intentionally or knowingly failed to report their offshore accounts, OVDI is extremely attractive.
Other programs exist for those with smaller balances and for American ex pats living overseas. For those who believe they can prove that their actions were innocent, a voluntary disclosure may be the best bet. There are no guaranties with voluntary disclosures, however, meaning a tax evasion prosecution is a real possibility if the government believes the failure to report was deliberate.
Tax evasion is a serious crime. If you are under investigation for failure to report a foreign account or other tax problems, seek the assistance of an experienced criminal tax lawyer immediately. Filing missing returns or speaking to the IRS without a lawyer present may jeopardize your case and your freedom.
For more information about tax evasion and other criminal tax cases, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries are protected by the attorney – client privilege and kept in strict confidence. Whether you hire or us or not, we will gladly discuss your options at no cost and without obligation.
Mahany & Ertl – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and San Francisco, California. IRS tax services available worldwide.
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